LS Power COO Darpan Kapadia says the power sector faces sweeping investment needs across gas, renewables, transmission and more, arguing that today's demand growth is real while supply will take time to catch up.

LS Power has closed a $6 billion private equity fundraise, up from an initial $4 billion target, the power infrastructure company said earlier this month. About $1.7 billion of that money is dedicated to LS Power's planned purchase of roughly 5 GW from Constellation Energy.

Utility Dive spoke with Darpan Kapadia, LS Power's chief operating officer, to get the company's views on what is driving the power sector, including data center demand, the outlook for gas-fired and renewable generation, and opportunities in transmission development.

Founded in 1990, LS Power built a portfolio of roughly 5 GW of gas-fired power plants, which it sold to Cogentrix and NRG Energy by 2001, Kapadia said. After a series of power plant bankruptcies in the early 2000s, LS Power launched its private equity arm and rebuilt its portfolio by buying distressed assets. The privately held company has since raised more than $19 billion in private equity, he noted.

LS Power owns or majority-owns Clearlight Energy, Endurant Energy, EVgo, LS Power Grid and REV Renewables.

*This interview has been edited for length and clarity.*

**Utility Dive:** What opportunities are out there for investing the money from the fundraise?

**Kapadia:** We have our private equity business, our generation development business and our transmission development business. We're in a unique position to buy or build any power infrastructure-related project across the United States.

We were able to raise this quantum of capital at the speed we did for a few reasons. First, investors appreciated the differentiated platform we've built over 35 years. That's hard to replicate. Second, we have a long-term, realized track record of investing in the space. Lastly, I think at this moment there is investor interest in establishing exposure to the sector trends playing out in power today.

**Utility Dive:** What types of trends?

**Kapadia:** We think about the opportunity set in three large categories. The first is conventional generation, which includes gas-fired combined-cycle and peaking projects. The second is renewables, including solar, wind, run-of-river hydro, pumped storage hydro, battery storage and renewable fuels. The third is distributed resources, such as energy efficiency, demand response and microgrids.

We were comfortable raising a $6 billion fund, more than twice the size of our last fund, because we see interesting opportunities across all three categories.

On conventional generation, demand for firm capacity is growing at rates we haven't seen before. For the last couple of decades, electricity demand growth was limping along between zero and half a percent. Today, depending on the region, demand is growing anywhere from 1% to 4% or 5%. Much of the incremental demand is for firm capacity, the kind that can ramp up, ramp down and stay online.

Renewables are particularly interesting right now. Whenever you see dramatic swings in fundamentals, policy and sentiment, opportunities are created. We're seeing that in renewables today, particularly in already built, operating, cash-flowing assets, as well as select development platforms.

One of the largest transactions we've done is the acquisition last year of Algonquin's North American renewable business. It was a complicated situation: 44 assets across a dozen states, five power markets, four provinces and two countries, with a varied commercial profile. There were long-term contracts, merchant assets and development projects, and a mix of technologies. We were able to take the whole thing down.

In particular, non-U.S. sellers are repositioning their businesses, and that is generating opportunities.

Sentiment can shift rapidly, and that creates opportunities. We saw that on the gas side not long ago. We were acquiring gas-fired assets when sentiment around those projects was quite negative.

**Utility Dive:** Speaking of sentiment shifts, how is LS Power thinking about AI-driven data center demand growth? How do you assess the validity of demand forecasts right now, and the risk of a potential power supply overbuild?

**Kapadia:** We've lived through these cycles, and history can repeat itself, or at least rhyme. But our view is that today's environment is very different from the one the sector went through in the early 2000s.

The demand growth we're experiencing is real. It feels extremely durable, and it's more diverse than AI and data centers alone. It includes manufacturing, electrification and demand for compute beyond AI. We think the drivers are secular and durable.

Just as important as the demand story is what's happening on the supply side. It has never been harder or more expensive to build new generation, particularly gas-fired generation, than it is today.

So you have demand growth that feels real and durable, and supply that will take time to catch up. The markets are signaling that.

**Utility Dive:** PJM Interconnection is one of those markets sending that signal. How is LS Power thinking about new build in PJM and potential uprates?

**Kapadia:** Much of the new demand can come online very quickly. You can stand up a data center in one or two years, but from an energy infrastructure developer's perspective, the process takes longer. That creates a lag between new demand showing up and supply arriving to meet it.

On the development side, it takes longer and more capital to get through the interconnection process and to secure necessary equipment. Across the steps that must be completed, a large combined-cycle gas project can take four, five or six years from start to energization in PJM, or in any other market.

In the interim, there are things developers can do, such as expansions and uprates. Demand response and energy efficiency can also play an even greater role in taking some of the strain off the system until supply catches up with demand.

**Utility Dive:** To what extent does the recent rise in interest rates affect project viability and decision-making?

**Kapadia:** The impact is marginal. When you develop large energy infrastructure, interest costs are a relatively small portion of the total. Building a 1 GW combined-cycle plant today likely costs north of $3 billion, roughly twice what it cost six or seven years ago. Construction cost inflation is the bigger issue. Rising rates are part of that picture, but they are not critical.

**Utility Dive:** What is LS Power seeing in terms of transmission opportunities?

**Kapadia:** When significant shifts happen in the sector, it's not only the generation side that has to adapt. The transmission side has to adapt too.

Ultimately, we need to move electrons across the system in a way that relieves congestion, makes the system more efficient and reduces costs for ratepayers and businesses. In this period of intense focus on affordability, policymakers appreciate that a competitive transmission market is good for ratepayers. Opening markets to competition from independent transmission developers like LS Power has been a positive development for the industry, and I think that trend will continue.

The permitting bill pending in the Senate includes a substantial set of transmission-related provisions.

**Utility Dive:** When you think about the challenges of building transmission, or any infrastructure, where do permitting issues rank among the challenges developers face?

**Kapadia:** We're building assets with 20-, 30- and 40-year time horizons, so we need durable policies. That applies to both generation and transmission. We need clear, undistorted market signals. We are strong proponents of competition in both generation and transmission.

Policies that reduce barriers to execution are also important. That can mean permitting reform, and clearer and quicker interconnection processes. So policies that…